By Guillermo Parra-Bernal and Natalia Gómez
SAO PAULO, Oct 1 (Reuters) - Grupo BTG Pactual SA
led Brazil's mergers and acquisitions rankings in
the first nine months as Chief Executive Officer André Esteves'
focus on advising fast-growing segments translated into almost
$4 billion worth of announced deals in the July-September period
The São Paulo-based bank leapfrogged rivals such as Credit
Suisse Group and Itaú BBA in so-called league tables after
landing 14 deals in the third quarter alone, Thomson Reuters
data showed. So far this year, BTG Pactual has advised on 36
transactions totaling $11.73 billion, or a third of announced
deals in the year through Sept. 30.
Companies announced $34.15 billion worth of deals in Brazil
in the first nine months of the year, down 37 percent from a
year earlier, a quarterly Thomson Reuters report on M&A activity
said. That is the lowest for the January-to-September period
since $14.07 billion in deals were announced in 2005. The number
of deals fell to 426 in 2013 from 647 in the same period of last
year, the report showed.
Takeovers will continue to gain traction because of the need
to consolidate market gains in some industries, the involvement
of private-equity firms in local M&A and interest from global
conglomerates in tapping Brazil's nearly 200 million consumers,
said Marco Gonçalves, managing director for M&A at BTG Pactual.
Gonçalves and other bankers shrugged off a view among many
investors for months that erratic policy decisions, mounting
state interference in some sectors and a slowing economy were
behind a slump in M&A activity in Brazil. Instead, they said the
deterioration in global markets and a price gap between buyers
and sellers were the main culprit behind the slump.
"There is more visibility in terms of the macroeconomic
outlook and, despite the existence of a great deal of
uncertainty in global markets, bidders and sellers are finally
reaching common ground," Gonçalves said in an interview at BTG
Pactual's offices in São Paulo.
As Brazil's $2.3 trillion economy stagnated, buyers pressed
for lower prices while sellers refused to give in - creating a
mismatch that prevented the completion of several deals for
months. In addition, worries that the U.S. Federal Reserve will
soon taper off years of economic stimulus also kept global
investors and dealmakers cautious.
But an 11 percent slump in Brazil's currency, the real
, since May helped bring down the price of many Brazilian
companies more attractive for potential bidders in dollar terms.
"That might have made valuations a little more attractive,
perhaps helping close the price gap," Alessandro Farkuh, head of
M&A for Bradesco BBI, the investment-banking unit of Banco
Bradesco SA, said in a phone interview.
For investment banks, which depend on giving merger advice
for about half their revenue in Brazil, the government's
willingness to sell rights to drill for oil and operate airports
and toll roads could mean a boon for business.
Strategic buyers, especially local players in the consumer
goods and infrastructure sectors, are looking for takeover
targets in a country where about 40 million people joined the
middle class in the past decade, said Fabio Mourão, who heads
M&A advisory for Credit Suisse in São Paulo.
"Foreign investors are a little more cautious, because they
don't operate here. That is why you should see more local
consolidation movements - as foreigners stay on the sidelines,
strategic local investors gain space," Mourão said.
BTG Pactual advised Vale SA on the $1.8 billion
sale of its VLI SA general rail- and port-cargo unit to a group
of Canadian, Japanese and Brazilian investors. The bank also saw
the fruits of a non-exclusive partnership with debt-laden tycoon
Eike Batista after advising on a $559 million stake in logistics
company LLX Logística SA to EIG Global Energy
Partners in August.
The bank's strong dealflow in the third quarter included
cross-border transactions in the real estate, card payment
processing, mining and leisure industries. BTG Pactual expects
deals in the infrastructure and services sectors to also gather
pace through year-end, Gonçalves added.
Credit Suisse trailed BTG Pactual and ranked second in terms
of deal size, advising on 16 takeovers worth $9.28 billion. The
deals included education company Estacio Participações SA's
$271 million purchase of rival TCA Investimentos e
Participações Ltda. Credit Suisse also advised LLX on the EIG
Foreign banks such as Credit Suisse have stayed atop
rankings in the past few months as private equity and sovereign
wealth funds look for advisors with global reach to help them
with Brazilian deals.
"Buyout firms are well capitalized, and what I take from my
talks with them is that more deals are in the offing," Credit
Suisse's Mourão added.
Itaú BBA, the investment-banking unit of Brazil's No. 1
private-sector lender Itaú Unibanco Holding SA,
advised on $7.11 billion worth of deals in the
January-to-September period. Bradesco BBI ranked fourth, after
participating in 12 deals worth $5.46 billion.
Itaú BBA advised on MMX Mineração e Metálicos SA's
sale of its Chilean unit in August. Itaú was No. 2
ranked in number of deals, with 29 - only behind BTG Pactual.
The following is a table with M&A rankings in Brazil for the
first nine months of the year.
RANK FINANCIAL ADVISOR RANKING NUMBER MARKET
VALUE OF OF SHARE
DEALS DEALS (VALUE OF
1. Grupo BTG Pactual SA $11.73 bln 36 34.3 pct
Credit Suisse Group $9.28 bln 16 27.2 pct
Itaú BBA $7.11 bln 29 20.8 pct
Bradesco BBI $5.46 bln 12 16.0 pct
Bank of America $4.28 bln 7 12.5 pct
Goldman Sachs Group $4.05 bln 9 11.9 pct
Morgan Stanley & Co $3.53 bln 6 10.3 pct
Citigroup Inc $3.27 bln 3 9.6 pct
Rothschild $3.20 bln 9 9.4 pct
Deutsche Bank AG $1.77 bln 3 5.2 pct